Monday, December 29, 2014

GMO versus NonGMO: The Cost of Production

Recently I was asked to answer a question on GMO Answers regarding what the productions costs are comparing GMO and nonGMO crops. For my family farm, that specifically means corn or soybeans. The hay including alfalfa, tomatoes, green beans, and grapes have not been genetically engineered, they are "conventional" or traditional hybrids from other means of plant breeding.

Answering the question in terms of costs necessitates the entire picture of yield and price per bushel, otherwise a farmer would have an incomplete picture by which to make business decisions that impact the sustainability of the family farm. The other critical piece that folks don't seem to grasp is the market demand in various regions. Farmers grow what there is demand for, plain and simple. What markets are available in our region and the products they want from farmers. Economics 101. We don't grow what we can't sell. For us, there is greater demand for GMO derived feed and imgredients than there is for nonGMO feed and ingredients. Strange isn't it? You haven't heard that before have you? The media would lead you to believe otherwise, but the media aren't connected to the farm community or its markets. If you are believing only what you read in the media, then you are not seeing the entire picture, just a very small slice of their pie, so to speak.

The data below is our data, no one else's data. We can't make sustainable business decisions based on hypotheticals or someone else's data. We make decisions for our farm based on our outcomes and experiences. These figures are not everyone else's figures. These figures do not extrapolate to our neighbors or farmers in other regions or states. These figures are what drives our decision making and choices for the coming year. If the market changes, we change our decision making process. If yield or costs change, we change our decision making process. In the end, our goal is to have healthy soils producing healthy foods and have a sustainable family farm to leave for the next generation.

Will Rogers is credited with the quote: "The farmer has
to be an optimist or he wouldn't still be a farmer." Optimistically,
each winter we review our harvest data comparing our crop yield by variety to
our cost of production for that crop that season, in consideration of the type
of growing season we had, in order to decide what seeds to purchase for the
coming season.

Since 1998, we have been growing both GM and non-GM corn and
soybeans. (We don’t actually use the term “GM” or “GMO” since all domesticated
crops have been genetically modified, but am using the acronym for the sake of
this audience). We run the numbers ever year for every variety and every crop
because that’s the only way to run any successful business. We collect the data
on what worked and what didn’t work and make changes and improvements or what
many businesses call “continuous quality improvement.”

2014 Corn Production Non-Irrigated

Cost Per Acre

Non BT Corn

BT Corn

Seed

$65

$114

Fertilizer

$123

$123

Herbicide

$40

$21

Crop Insurance

$40

$40

Fertilizer Application

$7.50

$7.50

Planting

$28

$28

Nitrogen Application

$9.50

$9.50

Pesticide Application

$20.00

$9.00

Harvest

$28.00

$28.00

Hauling

$25.00

$25.00

Drying

$60

$60

Land Rent

$150

$150

Total Cost of Inputs

$596/ac

$615/ac

BPA=bushels per acre

186 BPA

221 BPA

Current cash price/bu

(Salisbury, MD)

$4.01

$4.01

Gross Income/ac

$745.86

$886.21

Net Income Difference

$149.86

$271

2014 Soybean Production Non-Irrigated

Cost Per Acre

Non-GMO for Food

GMO for Feed

GMO for Seed

GMO High Oleic

Seed

$41

$53

$53

$53

Fertilizer

$21

$21

$21

$21

Herbicide

$40

$18

$18

$18

Crop Insurance

$32

$32

$32

$32

Fertilizer application

$7.50

$7.50

$7.50

$7.50

Planting

$20

$20

$20

$20

Pesticide application

$24

$18

$18

$18

Harvest

$28

$28

$28

$28

Hauling

$9

$9

$9

$9

Land Rent

$150

$150

$150

$150

Total Cost of Inputs

$372.50

$356.50

$356.50

$356.50

Bushels/Ac (BPA)

35 BPA

50 BPA

50 BPA

55 BPA

Price/Bushel

$12.25

$9.60

$11.50

$11.25

Gross Income

$472.5

$480

$575

$619

Net Income Difference

$100

$124

$219

$263

The first year we planted Bt corn was 2000. As you can see
from the chart below, it has out-performed conventional corn every single year.
What is most noteworthy however, is the importance of its performance in
unfavorable growing years. We had drought conditions from 2010-2012. A
healthy crop is a more productive crop and in bad years, that can make the
biggest difference to the financial sustainability of the family farm. I previously had included our organic corn data in this chart but have since removed it. We grew conventional, biotech, and organic corn simultaneously but stopped our organic production in 2011. It average was below 50 bushels per acre and makes a very poor comparison. We decertified our organic ground and for that reason, I no longer include the data.

Corn (non-irrigated)

2000

2004

2010
(slight drought)

2011

(drought & hurricane)

2012

(drought)

2013

2014

Biotech Acres

10

276

573

397

464

290

275

Avg Yield BPA

171

182

110

44

111

214

220

Conventional Acres

647

415

195

213

261

75

200

Avg Yield BPA

165

167

91

18

57

202

186

Biotech/Bt
Yield Advantage

6.4

15

19

26

54

12

34

Price/Bu

$2.35

$2.55

$5.18

$6.47

$7.40

$4.41

$4

Net income difference

Due to yield

$15.04

$38.25

$98.42

$168.22

$399.60

$53

$136

Likewise in our soybean production history, we have
consistently experienced a better yield in our GM soy over our non-GM soy. We
grow four “classes” of soy: soy for food, soy for feed, soy for seed, and a
specialty GM bean High Oleic (HO) acid beans. The HO beans go for feed but the
oil that is extracted is used in baking and frying which eliminates the
trans-fatty acids from using hydrogenated soybean oil as an ingredient. These
beans are kept segregated and true to their variety in order to have the highest
quality HO oil from the extraction process.

Soybeans (dryland)

1998

2000

2005

2010

(slight drought)

2011

(drought

& hurricane)

2012

(drought)

2013

2014

Biotech Acreage

195

322

416

270

522

527

200

300

Yield bu/a

54.2

50.3

53.5

46

37

43

48

55

Conventional Acreage

156

184

213

306

750

675

175

100

Yield bu/a

48.2

43.2

46.3

36

34

36

25

35

Yield Difference

6 bu

7.1 bu

7.2 bu

10 bu

3 bu

7 bu

23

20

Price/Bushel

$6.90

$6.62

$7.25

$11.30

$12.52

$14.55

$13.55

$11.25

Income Difference/
Acre

$41.40

$47.00

$52.20

$113.00

$37.56

$101.85

$312

$225

Even when there is a premium involved with growing a non-GM
grain, due to better yields, GM has out-performed non-GM on our farm every
year. We have experienced higher yields in all of our GM crops in the nearly 17
years we have been using the seeds. We grow what we have market access to sell
in our region. Our choice to buy seed is based on the success of various seeds
we have tried and well as University research conducted in our area. We don’t
pay attention to data that comes from other growing regions in the US because
it generally isn’t relevant to the conditions we experience. We use a “prove
it” mentality in that we will give a seed a try on a limited number of acres
and do our own compare and contrast to our other fields. Our decision making is
balanced by diversity of the markets we can access, the demand within those
markets, and the productivity that we have seen for ourselves to justify which
type of seeds to plant each and every year.

As I said at the beginning, these are our costs and our production figures. Don't assume they are the same for all farmers. They are not.

11 comments:

This is fantastic. Thank you for sharing these details. This is something that has been lacking from the conversation. I know Iowa was planted in 95% GM corn this year which means most farmers must be seeing similar data as you see on your farm. Can't wait to share this info!

Thanks Jen - good info .... I like the fact that you emphasize that this is data from your farm and based on your experiences. Too often people paint farms and farmers in black/white simplistic terms and generalizations. Thanks again!

I've actually seen just the opposite on my farm. The lower cost of non-gmo and the premium have made it more profitable. We haven't seen any yield drag. I've even seen the new non-gmo varieties out yield the gmo. Right now I'm looking at a 2.5-3$ premium for non-gmo beans. 60 cents for corn. But the real winner I've had is my organic acres. I've been able to get 245bu/acre yields on corn with a 12.50$ price. My gmo and non-gmos never will be as profitable as my organic acres.

Which is what most folks don't understand. What works on one farm doesn't necessarily work on someone else's farm. There is no cookie cutter method that applies across the board. Thanks for sharing your experience.

We use Pioneer,and Seitec hybrids. Western corn belt about 110 day corn. We plant mainly white because theres a better premium and you can color sort the GMO's out. P33F12 In yellow it can be hard to stay below 1.5% contamination.

Thank you very much for this information. It is useful for my research of the US market.

I have a query. Is it possible for you to kindly explain the cost for growing and finishing corn and soy seed in a similar manner? Or atleast a tentative information on cost structures for the same? Thanks in advance, your blog is very helpful!